8-K/A 1 a2051804z8-ka.txt 8-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------------- FORM 8-K/A JOINT CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): APRIL 2, 2001 Commission file number 0-9109 Commission file number 0-9110 MEDITRUST CORPORATION MEDITRUST OPERATING COMPANY (Exact Name of Registrant as (Exact Name of Registrant as specified in its charter) specified in its charter) DELAWARE DELAWARE (State or other jurisdiction (State or other jurisdiction of incorporation) of incorporation) 95-3520818 95-3419438 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) 909 HIDDEN RIDGE, SUITE 600, 909 HIDDEN RIDGE, SUITE 600, IRVING, TX 75038 IRVING, TX 75038 (Address of principal executive (Address of principal executive offices and zip code) offices and zip code) (214) 492-6600 (214) 492-6600 (Registrant's telephone number, (Registrant's telephone number, including area code) including area code) ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS. On April 3, 2001, pursuant to a Purchase and Sale Agreement dated as of December 20, 2000 and amended March 8, 2001 and March 29, 2001, Meditrust Corporation and Meditrust Operating Company (collectively, the "Companies") announced the transfer of its beneficial ownership interest in a majority of its long term care skilled nursing facilities to Care Realty, L.L.C. (the "Care Realty Transfer"). Total gross proceeds of $441 million include $406 million in cash and $35 million in subordinated indebtedness due April 2006 paying interest at a rate of 9%. The press release attached hereto as Exhibit 99.1, which is hereby incorporated by reference herein, provides additional information regarding the transaction. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements of Business Acquired. Not applicable. (b) Pro Forma Financial Information. The Meditrust Companies
Pro Forma Combined Consolidated Balance Sheets as of March 31, 2001 (Unaudited) and December 31, 2000 (Unaudited)............................................................................. 3 Pro Forma Combined Consolidated Statements of Operations for the three months ended March 31, 2001 (Unaudited) and the year ended December 31, 2000 (Unaudited)............................... 4 Meditrust Corporation Pro Forma Consolidated Balance Sheets as of March 31, 2001 (Unaudited) and December 31, 2000 (Unaudited)............................................................................. 5 Pro Forma Consolidated Statements of Operations for the three months ended March 31, 2001 (Unaudited) and the year ended December 31, 2000 (Unaudited)............................... 6 Meditrust Operating Company Consolidated Balance Sheets as of March 31, 2001 (Unaudited) and 7 December 31, 2000......................................................................................... Consolidated Statements of Operations for the three months ended March 31, 2001 (Unaudited) and the year ended December 31, 2000.......................................................... 8 Notes to Pro Forma Combined Consolidated Financial Statements................................................. 9
(c) Exhibits.* Exhibit No. Description 2.1 Purchase and Sale Agreement** 2.2 First Amendment to Purchase and Sale Agreement** 2.3 Second Amendment to Purchase and Sale Agreement** 99.1 Press release of The Meditrust Companies dated April 3, 2001 announcing the completion of a $441 million asset sale.
* Previously filed on Joint Current Report on Form 8-K, event dated April 2, 2001. ** The Companies agree to furnish supplementally to the Commission a copy of any omitted schedule or exhibit to this agreement upon request by the Commission. THE MEDITRUST COMPANIES PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma consolidated financial statements have been prepared to give effect to the transfer of Meditrust Corporation's beneficial ownership interest in the majority of its long term care skilled nursing facilities to Care Realty, L.L.C. The unaudited pro forma consolidated balance sheets have been prepared assuming that the transactions described above were completed on the balance sheet dates indicated. The unaudited pro forma consolidated statements of operations have been prepared assuming the transactions described above were completed at the beginning of the indicated periods. The pro forma adjustments are based upon available information and contain assumptions that management believes are reasonable under the circumstances. The unaudited pro forma consolidated financial statements are provided for informational purposes only and do not purport to be indicative of the Companies' financial condition or the results of operations that would actually have been obtained had such transactions been completed for the periods or as of the dates presented or that may be obtained in the future. The unaudited pro forma consolidated financial statements and related notes should be read in conjunction with the Combined Consolidated Financial Statements of the Companies and the notes thereto, Management's Discussion and Analysis of Financial Condition and Results of Operations and other financial information included on the Joint Annual Report on Form 10-K and the Quarterly Report on Form 10-Q. 2 THE MEDITRUST COMPANIES PRO FORMA COMBINED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS) MARCH 31, 2001 DECEMBER 31, 2000 ----------------------------------------- ---------------------------------------- HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA -------------- ------------ ------------- ------------- ------------ ------------- ASSETS: Real estate investments, net ...................$ 3,322,002 $ (430,108)(1) $ 2,891,894 $3,352,676 $ (435,950)(1) $2,916,726 Cash and cash equivalents....................... 36,396 404,533 (2) 39,929 38,993 404,533 (2) 42,526 (401,000)(3) (401,000)(3) Fees, interest and other receivables............ 60,547 29,872 (4) 90,419 73,476 29,872 (4) 97,905 - (5,443)(5) Goodwill, net................................... 452,104 - 452,104 457,789 - 457,789 Other assets, net............................... 161,863 - 161,863 170,213 - 170,213 ------------ -------------- ------------ ------------ -------------- ------------ Total assets..............................$ 4,032,912 $ (396,703) $ 3,636,209 $4,093,147 $ (407,988) $3,685,159 ============ ============== ============ ============ ============== ============ LIABILITIES: Indebtedness: Notes payable, net..........................$ 1,013,806 $ (401,000)(3) $ 612,806 1,013,640 $ (401,000)(3) $ 612,640 Convertible debentures, net................. 53,942 - 53,942 136,915 - 136,915 Bank notes payable, net..................... 486,176 - 486,176 397,827 - 397,827 Bonds and mortgages payable, net............ 33,778 - 33,778 42,077 - 42,077 ------------ -------------- ------------ ------------ -------------- ------------ Total indebtedness........................ 1,587,702 (401,000) 1,186,702 1,590,459 (401,000) 1,189,459 ------------ -------------- ------------ ------------ -------------- ------------ Accounts payable, accrued expenses and other liabilities................................. 137,274 4,297 (6) 141,571 179,877 3,945 (6) 183,822 ------------ -------------- ------------ ------------ -------------- ------------ Total liabilities........................ 1,724,976 (396,703) 1,328,273 1,770,336 (397,055) 1,373,281 ------------ -------------- ------------ ------------ -------------- ------------ COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Meditrust Corporation Preferred Stock, $0.10 par value; 6,000 shares authorized; 701 shares issued and outstanding at March 31, 2001 and December 31, 2000, respectively............................... 70 - 70 70 - 70 Paired Common Stock, $0.20 combined par value; 500,000 shares authorized; 143,008 and 142,905 paired shares issued and outstanding at March 31, 2001 and December 31, 2000, respectively............................. 28,603 - 28,603 28,580 - 28,580 Additional paid-in-capital................... 3,659,662 - 3,659,662 3,659,339 - 3,659,339 Unearned compensation........................ (4,489) - (4,489) (4,911) - (4,911) Accumulated other comprehensive income....... (812) - (812) (985) - (985) Distributions in excess of net income........ (1,375,098) - (1,375,098) (1,359,282) (10,933)(7) (1,370,215) ------------ -------------- ------------ ------------ -------------- ------------ Total shareholders' equity............... 2,307,936 - 2,307,936 2,322,811 (10,933) 2,311,878 ------------ -------------- ------------ ------------ -------------- ------------ Total liabilities and shareholders' equity................................ $ 4,032,912 $ (396,703) $ 3,636,209 $4,093,147 $ (407,988) $3,685,159 ============ ============== ============ ============ ============== ============
3 THE MEDITRUST COMPANIES PRO FORMA COMBINED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED (IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31, 2001 DECEMBER 31, 2000 -------------------------------------------- ---------------------------------------- HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA ------------- --------------- -------------- ------------ ------------ ------------ REVENUE: Hotel.................................... $ 152,996 $ - $ 152,996 $ 611,545 $ - $ 611,545 Rental................................... 27,194 (16,676)(8) 10,518 116,040 (65,766)(8) 50,274 Interest................................. 9,263 (2,134)(9) 7,129 95,253 (5,920)(9) 89,333 ------------- --------------- ------------ ------------ -------------- ------------ 189,453 (18,810) 170,643 822,838 (71,686) 751,152 ------------- --------------- ------------ ------------ -------------- ------------ EXPENSES: Hotel operations......................... 74,400 - 74,400 321,630 - 321,630 Interest................................. 34,936 (8,947)(10) 25,989 186,951 (38,112)(10) 148,839 Depreciation and amortization............ 35,300 - 35,300 150,138 (14,897)(11) 135,241 Amortization of goodwill................. 5,686 - 5,686 22,755 - 22,755 General and administrative............... 12,161 7 (12) 12,168 49,985 28 (12) 50,013 Rental property operations............... 7,804 - 7,804 28,895 - 28,895 Loss on sale of assets................... 54 - 54 130,536 - 130,536 Impairment of real estate assets, mortgages and notes receivable......... 21,088 - 21,088 183,698 5,489 (13) 189,187 Provision for loss on equity securities..................... - - - 50,279 - 50,279 Other.................................... 10,020 - 10,020 32,901 5,443 (14) 38,344 ------------- --------------- ------------ ------------ -------------- ------------ 201,449 (8,940) 192,509 1,157,768 (42,049) 1,115,719 ------------- --------------- ------------ ------------ -------------- ------------ LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPAL............................... (11,996) (9,870) (21,866) (334,930) (29,637) (364,567) Income tax expense...................... 176 - 176 629 - 629 ------------- --------------- ------------ ------------ -------------- ------------ LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE.................... (12,172) (9,870) (22,042) (335,559) (29,637) (365,196) Gain on early extinguishments of debt... - - - 1,403 - 1,403 Cumulative effect on prior years (to December 31, 2000) of change in accounting principle.................. 856 - 856 - - - ------------- --------------- ------------ ------------ -------------- ------------ NET LOSS................................... (11,316) (9,870) (21,186) (334,156) (29,637) (363,793) Preferred stock dividends............... (4,500) - (4,500) (18,000) - (18,000) ------------- --------------- ------------ ------------ -------------- ------------ NET LOSS AVAILABLE TO COMMON SHAREHOLDERS............................ $ (15,816) $ (9,870) $ (25,686) $ (352,156) $ (29,637) $ (381,793) ============= =============== ============ ============ ============== ============ BASIC LOSS PER PAIRED COMMON SHARE: Loss available to Common Shareholders before extraordinary item............... $ (0.12) $ (0.07) $ (0.19) $ (2.49) $ (0.21) $ (2.70) Gain on early extinguishments of debt...... - - - 0.01 - 0.01 Cumulative effect of change in accounting principle............................... 0.01 - 0.01 - - - ------------- --------------- ------------ ------------ -------------- ------------ Net loss................................... $ (0.11) $ (0.07) $ (0.18) $ (2.48) $ (0.21) $ (2.69) ============= =============== ============ ============ ============== ============ DILUTED LOSS PER PAIRED COMMON SHARE: Loss available to Common Shareholders before extraordinary item............... $ (0.12) $ (0.07) $ (0.19) $ (2.49) $ (0.21) $ (2.70) Gain on early extinguishments of debt...... - - - 0.01 - 0.01 Cumulative effect of change in accounting principle............................... 0.01 - 0.01 - - - ------------- --------------- ------------ ------------ -------------- ------------ Net loss................................... $ (0.11) $ (0.07) $ (0.18) $ (2.48) $ (0.21) $ (2.69) ============= =============== ============ ============ ============== ============
4 MEDITRUST CORPORATION PRO FORMA CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(IN THOUSANDS) MARCH 31, 2001 DECEMBER 31, 2000 ------------------------------------------ --------------------------------------- HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA ------------- -------------- ------------ ------------- ------------ ------------ ASSETS: Real estate investments, net .................. $ 3,302,644 $ (430,108)(1) $ 2,872,536 $ 3,333,168 $ (435,950)(1) $2,897,218 Cash and cash equivalents...................... 36,386 404,533 (2) 39,919 38,991 404,533 (2) 42,524 (401,000)(3) (401,000)(3) Fees, interest and other receivables........... 38,725 29,872 (4) 68,597 56,829 29,872 (4) 81,258 (5,443)(5) Goodwill, net.................................. 423,643 - 423,643 429,134 - 429,134 Rent and royalties receivable from Meditrust Operating Company............................ 140,532 - 140,532 63,516 - 63,516 Due from Meditrust Operating Company........... - - - 27,679 - 27,679 Other assets, net.............................. 108,215 - 108,215 117,275 - 117,275 ------------ -------------- ------------ ------------- -------------- ----------- Total assets............................. $ 4,050,145 $ (396,703) $ 3,653,442 $ 4,066,592 $ (407,988) $3,658,604 ============ ============== ============ ============= ============== =========== LIABILITIES: Indebtedness: Notes payable, net........................ $ 1,013,806 $ (401,000)(3) $ 612,806 $ 1,013,640 $ (401,000)(3) $ 612,640 Convertible debentures, net................ 53,942 - 53,942 136,915 - 136,915 Bank notes payable, net.................... 486,176 - 486,176 397,827 - 397,827 Bonds and mortgages payable, net........... 33,778 - 33,778 42,077 - 42,077 ------------ -------------- ------------ ------------- -------------- ----------- Total indebtedness....................... 1,587,702 (401,000) 1,186,702 1,590,459 (401,000) 1,189,459 ------------ -------------- ------------ ------------- -------------- ----------- Due to Meditrust Operating Company............. 28,747 - 28,747 - - - Accounts payable, accrued expenses and other liabilities................................. 72,425 4,297 (6) 76,722 110,545 3,945 (6) 114,490 ------------ -------------- ------------ ------------- -------------- ----------- Total liabilities........................ 1,688,874 (396,703) 1,292,171 1,701,004 (397,055) 1,303,949 ------------ -------------- ------------ ------------- -------------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Meditrust Corporation Preferred Stock, $0.10 par value; 6,000 shares authorized; 701 shares issued and outstanding at March 31, 2001 and December 31, 2000, respectively... 70 - 70 70 - 70 Common Stock, $0.10 par value; 500,000 shares authorized; 144,313 and 144,210 shares issued and outstanding at March 31, 2001 and December 31, 2000, respectively............................... 14,432 - 14,432 14,421 - 14,421 Additional paid-in-capital................... 3,592,640 - 3,592,640 3,592,306 - 3,592,306 Unearned compensation........................ (2,240) - (2,240) (2,526) - (2,526) Accumulated other comprehensive income....... 173 - 173 - - - Distributions in excess of net income........ (1,243,804) - (1,243,804) (1,238,683) (10,933)(7) (1,249,616) ------------ -------------- ------------ ------------- -------------- ----------- Total shareholders' equity............... 2,361,271 - 2,361,271 2,365,588 (10,933) 2,354,655 ------------ -------------- ------------ ------------- -------------- ----------- Total liabilities and shareholders' equity.................................$ 4,050,145 $ (396,703) $3,653,442 $ 4,066,592 $ (407,988) $3,658,604 ============ ============== ============ ============= ============== ===========
5 MEDITRUST CORPORATION PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED (IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31, 2001 DECEMBER 31, 2000 ----------------------------------------- --------------------------------------- HISTORICAL ADJUSTMENT PRO FORMA HISTORICAL ADJUSTMENT PRO FORMA ------------- ------------ ------------- -------------- ------------ ----------- REVENUE: Rental.....................................$ 27,194 $ (16,676)(8) $ 10,518 $ 116,040 $ (65,766)(8) $ 50,274 Interest................................... 9,257 (2,134)(9) 7,123 95,172 (5,920)(9) 89,252 Rent from Meditrust Operating Company...... 71,568 - 71,568 278,379 - 278,379 Interest from Meditrust Operating Company.. - - - 616 - 616 Royalty from Meditrust Operating Company... 5,448 - 5,448 20,666 - 20,666 Hotel...................................... 3,055 - 3,055 11,216 - 11,216 ------------- ------------ ------------ -------------- ------------ ----------- 116,522 (18,810) 97,712 522,089 (71,686) 450,403 ------------- ------------ ------------ -------------- ------------ ----------- EXPENSES: Hotel operations........................... 1,442 - 1,442 5,377 - 5,377 Interest................................... 34,857 (8,947)(10) 25,910 186,457 (38,112)(10) 148,345 Depreciation and amortization.............. 32,726 - 32,726 135,414 (14,897)(11) 120,517 Amortization of goodwill................... 5,492 - 5,492 21,977 - 21,977 General and administrative................. 4,340 7 (12) 4,347 19,017 28 (12) 19,045 Rental property operations................. 7,804 - 7,804 28,895 - 28,895 Loss on sale of assets..................... 54 - 54 131,513 - 131,513 Impairment of real estate assets, mortgages, and notes receivable.......... 21,088 - 21,088 183,698 5,489 (13) 189,187 Provision for loss on equity securities.... - - - 50,279 - 50,279 Other...................................... 10,020 - 10,020 32,901 5,443 (14) 38,344 ------------- ------------ ------------ -------------- ------------ ----------- 117,823 (8,940) 108,883 795,528 (42,049) 753,479 ------------- ------------ ------------ -------------- ------------ ----------- LOSS BEFORE INCOME TAXES AND EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE... (1,301) (9,870) (11,171) (273,439) (29,637) (303,076) Income tax expense......................... 176 - 176 629 - 629 ------------- ------------ ------------ -------------- ------------ ----------- LOSS BEFORE EXTRAORDINARY ITEM AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE....................... (1,477) (9,870) (11,347) (274,068) (29,637) (303,705) Gain on early extinguishments of debt...... - - - 1,403 - 1,403 Cumulative effect on prior years (to December 31, 2000) of change in accounting principle..................... 856 - 856 - - - ------------- ------------ ------------ -------------- ------------ ----------- NET LOSS...................................... (621) (9,870) (10,491) (272,665) (29,637) (302,302) Preferred stock dividends................. (4,500) - (4,500) (18,000) - (18,000) ------------- ------------ ------------ -------------- ------------ ----------- NET LOSS AVAILABLE TO COMMON SHAREHOLDERS..............................$ (5,121) $ (9,870) $ (14,991) $ (290,665) $ (29,637) $(320,302) ============= ============ ============ ============== ============ =========== BASIC LOSS PER COMMON SHARE: Loss available to Common Shareholders before extraordinary item.................$ (0.04) $ (0.07) $ (0.11) $ (2.04) $ (0.21) $ (2.25) Gain on early extinguishments of debt......... - - - 0.01 - 0.01 Cumulative effect of change in accounting principle................................. 0.01 - 0.01 - - - ------------- ------------ ------------ -------------- ------------ ----------- Net loss......................................$ (0.03) $ (0.07) $ (0.10) $ (2.03) $ (0.21) $ (2.24) ============= ============ ============ ============== ============ =========== DILUTED LOSS PER COMMON SHARE: Loss available to Common Shareholders before extraordinary item.................$ (0.04) $ (0.07) $ (0.11) $ (2.04) $ (0.21) $ (2.25) Gain on early extinguishments of debt......... - - - 0.01 - 0.01 Cumulative effect of change in accounting principle................................. 0.01 - 0.01 - - - ------------- ------------ ------------ -------------- ------------ ----------- Net loss......................................$ (0.03) $ (0.07) $ (0.10) $ (2.03) $ (0.21) $ (2.24) ============= ============ ============ ============== ============ ===========
6 MEDITRUST OPERATING COMPANY CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31, -------------------- ------------------- (IN THOUSANDS) 2001 2000 -------------------- ------------------- (unaudited) ASSETS: Cash and cash equivalents.................................................. $ 10 $ 2 Fees, interest and other receivables....................................... 21,822 16,647 Due from Meditrust Corporation............................................. 28,747 - Other current assets, net.................................................. 9,552 9,613 -------------------- ------------------- Total current assets.................................................. 60,131 26,262 Investment in common stock of Meditrust Corporation........................ 37,581 37,581 Goodwill, net.............................................................. 28,461 28,655 Property, plant and equipment, less accumulated depreciation of $10,954 and $9,339, respectively.............................................. 57,113 56,125 Other non-current assets................................................... 6,592 6,959 -------------------- ------------------- Total assets................................................ $ 189,878 $ 155,582 ==================== =================== LIABILITIES: Accounts payable........................................................... $ 28,259 $ 28,876 Accrued payroll and employee benefits...................................... 27,118 30,767 Accrued expenses and other current liabilities............................. 6,735 6,516 Rent and royalty payable to Meditrust Corporation.......................... 140,532 63,516 Due to Meditrust Corporation............................................... - 27,679 -------------------- ------------------- Total current liabilities............................................ 202,644 157,354 Other non-current liabilities.............................................. 2,737 3,173 -------------------- ------------------- Total liabilities.................................................... 205,381 160,527 -------------------- ------------------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common Stock, $0.10 par value; 500,000 shares authorized; 143,008 and 142,905 shares issued and outstanding at March 31, 2001 and December 31, 2000, respectively ...................................................... 14,302 14,290 Additional paid-in-capital................................................. 104,723 104,734 Unearned compensation...................................................... (2,249) (2,385) Accumulated other comprehensive income..................................... (985) (985) Accumulated deficit........................................................ (131,294) (120,599) -------------------- ------------------- Total shareholders' deficit........................................ (15,503) (4,945) -------------------- ------------------- Total liabilities and shareholders' equity..................... $ 189,878 $ 155,582 ==================== ===================
7 MEDITRUST OPERATING COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED FOR THE YEAR ENDED (IN THOUSANDS, EXCEPT PER SHARE DATA) MARCH 31, 2001 DECEMBER 31, 2000 -------------------- -------------------- REVENUE: (unaudited) Hotel ............................................... $ 150,045 $ 600,329 Interest ............................................ 6 81 -------------------- -------------------- 150,051 600,410 -------------------- -------------------- EXPENSES: Hotel operations .................................... 73,038 316,253 Depreciation and amortization ....................... 2,574 14,724 Amortization of goodwill ........................... 194 778 Interest and other .................................. 79 494 Interest to Meditrust Corporation ................... - 616 General and administrative .......................... 7,845 30,968 Royalty to Meditrust Corporation .................... 5,448 20,666 Rent to Meditrust Corporation ....................... 71,568 278,379 Gain on asset sales.................................. - (977) -------------------- -------------------- 160,746 661,901 -------------------- -------------------- NET LOSS .............................................. $ (10,695) $ (61,491) ==================== ==================== EARNINGS PER COMMON SHARE: Assuming no dilution ................................. $ (0.08) $ (0.43) Assuming dilution..................................... $ (0.08) $ (0.43)
8 THE MEDITRUST COMPANIES NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) BASIS OF PRESENTATION The pro forma combined consolidated balance sheets have been prepared assuming that the transfer of the Companies' beneficial ownership interest in certain healthcare facilities on April 3, 2001 was completed on the dates of the indicated periods. The pro forma combined consolidated statements of operations have been prepared assuming that the transaction described above was completed at the beginning of the indicated periods. TRANSACTION The pro forma financial statements reflect the closing of the following transactions: - The transfer of Meditrust Corporation's beneficial ownership interest in the majority of its long term care skilled nursing facilities to Care Realty, L.L.C. (the "Care Realty Transfer") for $406 million in cash and $35 million in subordinated indebtedness; and - The application of the net proceeds towards indebtedness of $401 million. PRO FORMA ADJUSTMENTS AND ASSUMPTIONS The following notes describe the adjustments made to the historical financial statements: (1) To reflect the transfer of Meditrust Corporation's real estate investments to Care Realty, L.L.C. as follows:
March 31, December 31, (IN THOUSANDS) 2001 2000 ------------- ----------------- Mortgages $ 96,185 $ 96,538 Leases 414,910 414,910 ------------- ----------------- 511,095 511,448 Impairment reserve (80,987) (75,498) ------------- ----------------- Total investment in real estate transferred $ 430,108 $ 435,950 ============= =================
(2) To record the net cash received at the closing of the Care Realty Transfer. (3) To record the repayment of notes payable with net proceeds received from Care Realty, L.L.C. (4) To record the $35 million in subordinated indebtedness, net of discount. (5) To reflect the write-off of straight-line rent receivables recorded at December 31, 2000. (6) To record the accrual of transaction costs incurred in connection with the Care Realty Transfer. (7) To record the effect of additional impairments identified in connection with the Care Realty Transfer and the effect of the write-off of straight-line rent receivables recorded at December 31, 2000. (8) To remove the historical rental revenue related to investments in leased assets transferred to Care Realty, L.L.C. (9) To remove the historical interest revenue related to investments in mortgages transferred to Care Realty, L.L.C. 9 THE MEDITRUST COMPANIES NOTES TO PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (10) To reflect the net effect on interest expense resulting from the application of proceeds received in connection with the Care Realty Transfer to repay notes payable as follows:
Three months ended, Year ended, (IN THOUSANDS) March 31, 2001 December 31, 2000 ------------------------- ----------------------- Proceeds applied to notes payable $ 401,000 $ 401,000 Weighted average interest rate* 8.9% 9.5% ------------------------- ----------------------- 8,947 38,112 ========================= =======================
* Prior to effect of interest rate swap agreement which would have reduced the interest expense adjustments by approximately $367,000 and $3,792,000, respectively, for the three months ended March 31, 2001 and the year ended December 31, 2000. (11) To remove the historical depreciation and amortization related to investments in leased assets transferred to Care Realty, L.L.C. (12) To remove the historical amortization of deferred gains on sale leaseback assets transferred to Care Realty L.L.C. (13) To reflect in the statement of operations for the year ended December 31, 2000 the additional impairment of real estate investments recorded in connection with the Care Realty Transfer. (14) To reflect in the statement of operations for the year ended December 31, 2000 the write-off of straight-line rent receivables recorded in connection with the Care Realty Transfer. 10 THE MEDITRUST COMPANIES SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrants have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: __________________________ MEDITRUST CORPORATION /s/ David L. Rea ---------------------------- David L. Rea Chief Financial Officer MEDITRUST OPERATING COMPANY /s/ David L. Rea ---------------------------- David L. Rea Chief Financial Officer 11